Sterling Stresses on Services PMI’s

GBPUSD,H1

The pound has traded significantly lower in the wake of the UK services PMI release, which fell to 53.0, the lowest reading since September 2016, from 54.2 in December. The median forecast had been for a fractional decline to 54.0. Following the release disappointing manufacturing and construction sector PMI surveys, the composite PMI reading fell to 53.5 from 54.9 in December, well under the median forecast for 54.6. Cable has skidded under 1.4050, down from the intraday high at 1.4150, which was seen before the PMI release. The pound has shown a similar magnitude decline versus the euro, and is showing a bigger losses to the outperforming yen, with GBPJPY presently showing a 0.6% loss (154.15) , which is trading in three-session low territory.

The straight forward exponential moving average cross over strategy took 20 pips out of the move down today. The 9 and 5 EMA crossed and a close below the Bollinger band mid line and the key 200 EMA , triggered an entry following the H1 candle close at 12:00. A simple target is the ATR (14) which was achieved within 90 minutes. H1 Support is now 1.4050.

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Stuart Cowell

Senior Market Analyst

HotForex

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